RBI panel asks banks to improve customer care

04 Aug 2011

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A committee set up by the Reserve Bank of India (RBI) wanted banks to ensure timely blocking of lost ATM cards on receipt of SMS messages and immediate restoration of funds lost in non-dispensed ATM transactions.

While the RBI had directed banks to ensure introduction of additional authentication / validation measures based on information not visible on the cards for all on-line card-not-present (CNP) transactions, except IVR transactions, from 1 August 2009, banks should ensure that compensation for transaction deficiencies are built in to the core banking system (CBS) software and not left to the discretion of the branch staff, it said.

"In case of customer complaint regarding issues, if any, arising out of transactions effected without the additional factor of authentication after the stipulated date, the issuer bank should reimburse the loss to the customer further without demur," the panel said.

Instant blocking of lost ATM cards through SMS and immediate restoration of funds in case of non-dispensation of cash at an ATM are among a host of recommendations made by the Reserve Bank of India's committee on customer service.

Besides, the committee on customer service has suggested that in the event of an ATM card being misused by another person then, on receipt of SMS about its use, the customer should be able to immediately send return SMS to block it and prevent further withdrawals, the committee has suggested.

The committee headed by M Damodaran, former chairman of the Securities and Exchange Board of India (SEBI), also wanted banks to take an active interest in such losses suffered by banks, rather than blaming it on customer negligence.

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